Latest news with #DarrenWoods
Bloomberg
3 days ago
- Business
- Bloomberg
Exxon to Keep Investing in Growth Even at $50-a-Barrel Oil
Exxon Mobil Corp. will keep its capital allocation plans intact even if oil declines toward $50 a barrel, Chief Executive Officer Darren Woods said. Late last year, the Texas oil giant stress-tested its business at 'more punitive scenarios' than the current environment and brought the results to the board, Woods said at Exxon's annual meeting Wednesday. The result is that the company will continue investing in new projects and returning cash to shareholders even if oil declines from the current $65 a barrel.
Wall Street Journal
6 days ago
- Business
- Wall Street Journal
Exxon and Chevron Face Off Over Coveted Oil Project in Guyana
Exxon Mobil XOM 0.06%increase; green up pointing triangle and Chevron CVX 0.92%increase; green up pointing triangle are battling this week over rights to one of the world's most coveted oil projects, a contest that has chilled the relationship between their senior executives and threatens to upend the industry's hierarchy. Exxon's XOM 0.06%increase; green up pointing triangle move last year to derail Chevron's $53 billion purchase of Hess HES 1.03%increase; green up pointing triangle rankled Chevron's senior executives and damaged a once-amicable relationship between the two rivals, people familiar with the matter said. Exxon CEO Darren Woods and Chevron CEO Mike Wirth occasionally dined together and spoke by phone about their joint interests in projects around the world. That relationship has chilled, the people said. The dispute hinges on Exxon's claim that it has a contractual right to pre-empt Chevron's bid for Hess's stake in a major oil project in Guyana. And it has delayed what would be Chevron's biggest-ever deal for more than 18 months. Chevron and Hess say Exxon doesn't have the right to interfere in the corporate acquisition. Talks failed, and Exxon filed for arbitration last year. The fight—which has astonished the oil industry in Houston—will come to a head Monday in London, with the start of a private arbitration hearing. By August or September, the panel will decide whether Exxon and another partner in Guyana, China's Cnooc, have the right to counter Chevron's bid for Hess's 30% stake in a generational oil discovery of 11 billion barrels of oil and gas. 'What it highlights is how valuable big, low-cost oil fields really are in a world where it's getting harder and harder to find them,' said Dan Pickering, chief investment officer of Pickering Energy Partners. All three companies have projected confidence that they will prevail. The ruling will hinge on the interpretation of several lines in a confidential contract. For Chevron, the arbitration is a must-win. Hess is a big player in the Bakken Shale of North Dakota, but its crown jewel is Guyana. Hess's share of the Guyana project could be worth some $40 billion, analysts estimated last year. Guyana's oil boom is fueled by six oil-production vessels now pumping around 650,000 barrels a day. Exxon hopes the consortium's production will reach 1.3 million barrels a day by 2027. That is more than the entire Bakken produces. The economics of the Guyana project are among the industry's most lucrative. Oil giants cut exploration spending following the advent of onshore U.S. shale drilling. Although some frackers are beginning to look overseas for new prospects, few frontier oil fields show as much promise as Guyana. Buying Hess—a deal that Chevron announced in October 2023—would help quell concerns investors have had about Chevron's portfolio of oil-production assets and where its growth will come from after 2030. Much has changed in the past year. Chevron recently started up a major expansion project in Kazakhstan and fired up a big new oil platform in the Gulf of Mexico, which the U.S. now calls the Gulf of America. It is trimming costs with job cuts of up to 20% of its global workforce by the end of 2026. Still, if Chevron falls short of a win, analysts say there are few other acquisition targets with the same potential as Hess. And Secretary of State Marco Rubio said Thursday that the U.S. plans to allow Chevron's license to operate in Venezuela, which has vast oil reserves, to expire Tuesday. Another reason Exxon's challenge is more than just a headache for Chevron is that it comes in an age of investor activism. In the 1980s, when a big court fight between Pennzoil and Texaco pushed the latter toward bankruptcy, a takeover bid by activist Carl Icahn—then dubbed a corporate raider—made Texaco's problems worse. These days, the margin for strategic errors has shrunk, said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University. She points to Exxon's proxy fight with activist investor Engine No. 1 that played out in 2021, and Elliott Investment Management's more-recent push for changes at Phillips 66 and BP. 'If you don't have a good strategy, you could be susceptible to a corporate raider or activist,' she said. 'We're in a time when the leadership of an oil company and the strategy they choose to take is material to whether people attack them from within the stakeholder groups.' For Exxon, a loss in the dispute would have little negative impact in the short term. By the time the arbitration panel's decision comes down, nearly two years will have passed since Chevron announced the Hess tie-up, a prolonged limbo that has kept it from pursuing other megadeals. When Chevron proposed buying Hess, Exxon's leaders were surprised that its partner in Guyana and its biggest competitor would—behind closed doors—strike a deal affecting a project that it had spent years developing. Exxon had done the spadework of government relations and assumed risk for the long-shot project after Shell exited its stake for a pittance in 2014. Exxon says it has a responsibility to shareholders to consider the value of Hess's Guyana stake in the Chevron deal, 'and a right to then take an option on it,' Woods said on a call with analysts in December. 'Why would we give that away because one of the partners constructed a deal with another third party?' Woods said. 'We don't see why that would change the way we think about the option or the value of that option.' Exxon has long held the role of big brother to Chevron, with larger oil production and superior profits. But during the pandemic, Chevron's stock market value briefly vaulted above its rival. Exxon's executives have since brought costs down and worked to gird the company from lower oil and gas prices. Exxon's shares have outperformed Chevron's in the past few years, but a tie-up with Hess would help Chevron narrow the gap, analysts say. If Exxon and Chevron ultimately work together in Guyana, the relationship among senior executives would bounce back, the people close to them predict. Some believe it may take time, though. 'Regardless of the outcome, there's a cooling off between Exxon and Chevron that will be measured in years, not quarters,' Pickering said. Write to Collin Eaton at
Time of India
21-05-2025
- Business
- Time of India
Exxon, BP & Shell explore tieup with ONGC in KG block
New Delhi: ExxonMobil, BP and Shell, three of the world's largest oil companies, have held preliminary discussions with Oil and Natural Gas Corp (ONGC) for a potential partnership in the Indian state-run firm's $5-billion deep-sea project in the KG basin, according to people familiar with the matter. ONGC's KG-DWN-98/2 block off India's eastern coast has faced prolonged delays and underperformance, prompting the PSU to seek partners with advanced capabilities to navigate the basin's complex geology, the people said. The KG Block comprises several discoveries grouped into three clusters, with only Cluster 2 currently producing. Drilling Cost The KG Block comprises several discoveries grouped into three clusters, with only Cluster 2 currently foreign majors are exploring a partnership specifically for Cluster 2. Exxon, BP, Shell and ONGC declined to comment. Exxon, with deep experience in deepwater drilling, is seen as the most serious contender. Its global CEO Darren Woods visited New Delhi in February — the first such visit by an Exxon CEO in a decade — and met oil minister Hardeep Puri, ministry officials and ONGC executives. Last year, Shell expressed initial interest in partnering with ONGC on its flagship Mumbai High field but did not submit a final bid. ONGC instead selected BP, the sole bidder, as the technical services provider for Mumbai High. Under the arrangement, BP will receive a fixed fee for the first two years and a share of incremental output over the next decade, without being required to make any capital investment. A similar model is unlikely for the KG project, as the basin is 'far too capital-intensive' compared to the western offshore, the people cited earlier said. The cost of drilling a single well in the KG block could be more than 10 times that of one in Mumbai High. 'A foreign partner can't come in just as a technical advisor. It must have skin in the game,' one person said. If a capex plan drawn up by an advisor were to fail, the financial burden would be huge and fall entirely on ONGC, the person added. Selling a participating interest is also fraught with complications, particularly given ONGC's state-owned status. 'Valuation can be questioned now or years later, with multiple state agencies getting involved,' the person said. A new partnership structure will likely need to be devised — one that enables risk-sharing while offering adequate safeguards for the state company to proceed, the person said. BP's chances appear slim due to a potential conflict of interest. BP and its partner Reliance Industries operate an adjacent KG block and have been in a prolonged legal dispute with the government following ONGC's 2014 accusation that the partners extracted gas that had migrated from ONGC's block. ONGC's KG block currently produces about 33,000 barrels per day (bpd) of oil and 2.5 million metric standard cubic meters per day (mmscmd) of gas. Production began last year, with peak output targets set at 45,000 bpd of oil and 10 mmscmd of gas — significantly lower than the 2016 projections of 70,000 bpd and 16.3 mmscmd.
Yahoo
21-05-2025
- Business
- Yahoo
Big Oil Shrugs at $60 Crude—for Now
The biggest international oil firms used the first-quarter earnings calls to reassure investors that Big Oil is in a 'business as usual' mode at oil prices at $60 per barrel. As ExxonMobil, Chevron, Shell, BP, and TotalEnergies reported their Q1 earnings and provided guidance for the second quarter and the rest of the year, oil prices were ending one of the worst months in years, in which oil sank to its lowest level since 2021. The market rout began on April 2, just after the first quarter ended, so the world's top international oil companies reported a fairly good set of Q1 results, with the exception of BP. But earnings calls analysts were much more interested to learn what happens next than what happened with profits and cash flows in the first quarter. Because the first quarter may have been the last 'business as usual' quarter for a long time. With oil in the low to mid $60 per barrel, the second quarter will see much lower cash flows from operations and earnings compared to executives expressed confidence that their firms can and will withstand the new market downturn and continue to reward shareholders with dividends. Exxon, which topped analyst estimates thanks to higher Permian and Guyana production, expressed confidence that the structural and cost-saving measures of the past few years have prepared it to weather the uncertain market environment. 'In this uncertain market, our shareholders can be confident in knowing that we're built for this,' said Darren Woods, chairman and chief executive officer.'The work we've done to transform our company over the past eight years positions us to excel in any environment.' Woods told analysts, 'In this environment, it's more important than ever to focus on what we can control, in this company's track record of delivery. The work we've done over the past eight years should make one thing clear: we're ready for this.' The other U.S. supermajor, Chevron, revised down its second-quarter buybacks to a range of between $2 billion and $3.5 billion in share repurchases. The company, however, remains positive about the future cash flows as developments in the Gulf of Mexico and Kazakhstan are set to boost growth. Chevron expects $9 billion in incremental free cash flow at $60 oil prices. 'We've been through these cycles before. We know what to do. We know how to manage through it, and we know that opportunity can present itself,' CEO Mike Wirth said. In Europe, Shell launched another $3.5-billion buyback, keeping the pace of its share repurchases, after posting consensus-beating earnings for the first quarter. The new share buyback program for the next three months will mark the 14th consecutive quarter of at least $3 billion in buybacks at the UK-based supermajor. 'We've spent a significant amount of time positioning this company over the last few years to make sure that we are able to manage not just run the company on fundamentals, but to ensure that we position it to be able to deliver through uncertainty,' Shell's chief financial officer Sinead Gorman said. 'We don't believe that at this moment in time, we need to step back within the capital range that we've got,' Gorman added. The flexibility to reduce capex is there, but 'that's not the position we're in at the moment,' the executive noted. Shell will continue buybacks at $50 oil and will be able to cover the dividends even at $40 oil price for a prolonged period of time, Gorman told analysts. BP, however, reduced by $1 billion its quarterly share buyback program after reporting weaker-than-expected earnings, significantly lower cash flow, and rising net debt for the first quarter. France's TotalEnergies remains confident it can sustain $2-billion buybacks in the second quarter despite lower oil Big Oil only cut 2% of total capex guidance during the Q1 earnings season, HSBC analyst Kim Fustier told the Financial Times, noting that none of the companies is rushing to drastic decisions that could be irreversible. 'They're in a bit of a wait-and-see mode,' Fustier told FT. HSBC lowered its earnings per share forecasts for Big Oil going forward, including slashing EPS projections for BP – seen as the most vulnerable – by 35%. Morgan Stanley, which has slashed its oil price forecasts to $62.50 amid expectations of a larger market surplus later this year, expects buybacks at Big Oil to be reduced by between 10% and 50%, with net debt at the international majors rising. Earnings at the biggest international oil companies are set to slump later this year and in 2026, threatening the pace of buybacks, as a substantial oil market surplus would weigh on prices, according to Morgan Stanley. Most analysts concur that Big Oil would not need to make drastic changes at $65 a barrel oil as the firms would be able to cover shareholder payouts at this price level. However, should prices sink to $60 and below for a longer period of time, sacrifices will have to be made, including capex at the low end of the range and buybacks trimmed or halted. By Tsvetana Paraskova for More Top Reads From this article on Sign in to access your portfolio
Time of India
21-05-2025
- Business
- Time of India
Exxon, BP & Shell explore tieup with ONGC in KG block
New Delhi: ExxonMobil, BP and Shell, three of the world's largest oil companies, have held preliminary discussions with Oil and Natural Gas Corp (ONGC) for a potential partnership in the Indian state-run firm's $5-billion deep-sea project in the KG basin, according to people familiar with the matter. ONGC's KG-DWN-98/2 block off India's eastern coast has faced prolonged delays and underperformance, prompting the PSU to seek partners with advanced capabilities to navigate the basin's complex geology, the people said. The KG Block comprises several discoveries grouped into three clusters, with only Cluster 2 currently producing. Drilling Cost The KG Block comprises several discoveries grouped into three clusters, with only Cluster 2 currently foreign majors are exploring a partnership specifically for Cluster 2. Exxon, BP, Shell and ONGC declined to comment. Exxon, with deep experience in deepwater drilling, is seen as the most serious contender. Its global CEO Darren Woods visited New Delhi in February — the first such visit by an Exxon CEO in a decade — and met oil minister Hardeep Puri, ministry officials and ONGC executives. Last year, Shell expressed initial interest in partnering with ONGC on its flagship Mumbai High field but did not submit a final bid. ONGC instead selected BP, the sole bidder, as the technical services provider for Mumbai High. Under the arrangement, BP will receive a fixed fee for the first two years and a share of incremental output over the next decade, without being required to make any capital investment. A similar model is unlikely for the KG project, as the basin is 'far too capital-intensive' compared to the western offshore, the people cited earlier said. The cost of drilling a single well in the KG block could be more than 10 times that of one in Mumbai High. 'A foreign partner can't come in just as a technical advisor. It must have skin in the game,' one person said. If a capex plan drawn up by an advisor were to fail, the financial burden would be huge and fall entirely on ONGC, the person added. Selling a participating interest is also fraught with complications, particularly given ONGC's state-owned status. 'Valuation can be questioned now or years later, with multiple state agencies getting involved,' the person said. A new partnership structure will likely need to be devised — one that enables risk-sharing while offering adequate safeguards for the state company to proceed, the person said. BP's chances appear slim due to a potential conflict of interest. BP and its partner Reliance Industries operate an adjacent KG block and have been in a prolonged legal dispute with the government following ONGC's 2014 accusation that the partners extracted gas that had migrated from ONGC's block. ONGC's KG block currently produces about 33,000 barrels per day (bpd) of oil and 2.5 million metric standard cubic meters per day (mmscmd) of gas. Production began last year, with peak output targets set at 45,000 bpd of oil and 10 mmscmd of gas — significantly lower than the 2016 projections of 70,000 bpd and 16.3 mmscmd.
